Pension savers could be missing out on big bonuses because people don’t know they are available, the Daily Mail has reported.
Investors could have missed out on boosts of up to 40 per cent on their retirement income by failing to take out an enhanced annuity, simply because they are not aware of the services available.
An annuity works by turning a lump sum of money, such as savings set aside for a pension, into a monthly income for life once you reach retirement age.
However, research has shown that more than 150,000 investors could be missing out on extra income by not taking advantage of enhanced annuities.
These pay more on a monthly basis because they take into account lifestyle factors such as poor health or medical conditions. An increased monthly income is offered on the basis that the company assumes you will have a shorter life-span than someone with no health problems such as being overweight, high blood pressure, or a wide range of other ailments. Serious conditions such as heart attacks or strokes would qualify for increases of up to 40 per cent, which could add up to hundreds of pounds each month.
But despite the Association of British Insurers saying that 1 in 4 could be eligible, the vast majority are missing out because they do not understand the services available.
Speaking to the Mail’s money section Nigel Callaghan, of Bristol-based financial adviser Hargreaves Lansdown, said: “This is a shocking indictment of the present system. The odds are stacked against investors in securing a fair annuity deal.
“Too many pension companies know that they can squeeze fat profit margins by selling normal annuities to their entire pension client bank.”
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